India Free Trade Agreement with Asean
India and ASEAN (Association of Southeast Asian Nations) have been in discussions and negotiations for a Free Trade Agreement (FTA) for over a decade. The aim of the agreement is to increase trade and investment between the two regions by reducing and eliminating tariffs and non-tariff barriers on goods, services, and investment.
As of August 2019, the FTA negotiations have been concluded for trade in goods and a final review is underway. The FTA in services and investment is still under negotiation.
The FTA between India and ASEAN is expected to have a significant impact on both regions. India`s trade with ASEAN has been growing at an average of 16% per year, with ASEAN being India`s fourth-largest trading partner. The FTA is expected to further boost India`s trade with ASEAN, especially in sectors such as agriculture, textiles, and chemicals.
The FTA will also provide ASEAN with better access to the Indian market, which has a growing middle class with increasing purchasing power. ASEAN countries will benefit from reduced tariffs on goods such as palm oil, rubber, and seafood.
The FTA is not without its challenges. One of the main concerns for India is the possibility of increased imports from ASEAN, which could harm domestic industry. To address this concern, India has proposed a “safeguard mechanism” that would allow temporary tariff hikes in case of import surges.
Another challenge for the FTA is the varying levels of development among the ASEAN countries. Some countries, such as Singapore and Malaysia, have more developed economies than others, and therefore have different priorities and interests in the agreement.
Despite these challenges, the FTA between India and ASEAN is expected to be a significant boost to trade and investment in both regions. The final review is expected to be completed soon, paving the way for the implementation of the FTA in the near future.